London-based resource market analyst Roskill Information Services is predicting significant shifts in the supply and demand dynamics of the natural and synthetic graphite industry.
According to its newly released report Natural & Synthetic Graphite: Global Industry Markets and Outlook, eighth edition, demand for natural graphite is shifting from amorphous to flake and synthetic graphite, particularly for large-flake and high-purity grades. Roskill says emerging applications such as batteries and flexible graphite products require higher performance and specialty products, and that to meet these new challenges, flake graphite production will increase outside China as new capacity is brought online over the next five years.
Roskill tallies over 70 flake graphite projects under development outside China that have the potential to add 200,000 tonnes per year to global capacity by 2016. About a quarter of this new capacity is in Canada, where there are 40 flake graphite projects, many at an early exploration stage, while other new sources include Australia, Brazil and Sweden.
World natural graphite production is growing, and is split into 55% flake and 45% amorphous output, Roskill notes, underscoring that China remains the world’s largest producer of natural graphite, both amorphous and flake, representing 70% of supply in 2011.
Roskill says that production in China this year is recovering from lower levels in 2011, as amorphous graphite mines come back on stream, following closures and consolidation in Hunan province.
Synthetic graphite production, meanwhile, is also increasing for use in specialist applications, Roskill says, reaching an estimated 1.5 million tonnes in 2011. The largest tonnages come from graphite-electrode manufacturers, with eight major producers worldwide. Roskill forecasts that markets such as electrodes, recarburizers and shapes will all grow through to 2016, with high-value carbon fibre also expanding as producers target the replacement of steel in aerospace and automotive applications.
Roskill argues that demand for natural flake graphite will continue to be driven by growth in refractories, which accounted for nearly 60% of flake consumption in 2011. Synthetic graphite consumption, meanwhile, will rise on the back of increased electrode manufacture, which represents just over half of synthetic graphite demand by volume. Lithium-ion battery anodes are an emerging market that provides one of the few platforms for natural and synthetic graphite to compete. Roskill reckons that consumption of graphite in batteries will grow rapidly at 10-12% per annum to 2016.
“For many years, China has led the way for international trade and pricing, as consumers look to take advantage of competitively priced raw materials. And this trend looks set to continue, at least in the short-term,” Roskill says, cautioning that Chinese graphite prices should soften going into 2013 following reduced demand from its main markets, and lower-than-expected economic growth in China.
In the longer term, Roskill expects Chinese export prices to rise as the country consolidates its natural graphite industry and adds value with domestically manufactured downstream products, perhaps resulting in less material available for exports.
At the same time, Roskill sees upward pricing pressures as rising costs of labour and environmental regulations are coupled with increasing mining overheads and the exhaustion of more-accessible reserves. If prices rise, Roskill concludes, this could result in consumers looking to buy graphite elsewhere, shifting traditional buying patterns.
— Roskill’s eighth edition of Natural & Synthetic Graphite: Global Industry Markets and Outlook is available for US$5,800 from www.roskill.com